Minority shareholder rights

The right to be informed / The right to attend general meetings and vote / The right to request the appointment of directors by cumulative voting / The right to challenge decisions of the general meeting of shareholders / The right to receive dividends from the company’s profits / How we can help you

The right to be informed

As a general rule, the directions of a company (investment regime, business plan, long-term strategy, etc.) are dictated by the majority shareholder/partner, either with the agreement of the minority shareholders/partners or, often, even with their opposition.

However, as far as the right of information is concerned, a partner/minority shareholder has exactly the same rights as the partner/majority shareholder.

The right to information concerns any kind of information related to the way the company is organised and operates (e.g. type of contracts concluded, identification of business partners, legal situation of the company’s assets, estimates of the company’s profit, content of annual financial documents, investment regime, etc.).

The right to information can be exercised, depending on the specifics of each company, in different ways:

receipt and verification of the documents to be submitted for approval at a general meeting of the members/shareholders;

• consultation of documents at the company’s registered office;
• obtaining data and information through dialogue with company directors;
• obtaining data and information by visiting the company’s website;
• obtaining data/information from the Bucharest Stock Exchange and/or the Central Depository.

The right to attend general assembly meetings and to vote

Any associate/shareholder, even a minority shareholder, shall have the right to attend and vote at general meetings of associates/shareholders.

After reaching certain value thresholds in relation to the size of the company’s share capital (e.g. shares representing 5% of the entire share capital) the minority shareholder has a number of additional prerogatives (e.g. the right to request the convening of a general meeting of shareholders, the right to request the introduction of new items on the agenda of the shareholders’ meeting, etc.).

The right to request the appointment of administrators by cumulative voting

In the case of listed companies (public limited companies) and companies subject to corporate governance (e.g. national companies), minority shareholders above a certain shareholding threshold may request the appointment of company directors by means of the cumulative voting method.

The appointment of directors of a company by cumulative voting is a legal mechanism to protect minority shareholders, allowing them to appoint a specific person to the company’s board.

The right to challenge decisions of the general meeting of members/shareholders

In a company, the majority will prevails over the minority will, in which case the resolutions of the general meeting of the members/shareholders are binding even on members/shareholders who voted against or were absent from the meeting.

However, to the extent that the decision adopted by the majority shareholder/partner is contrary to the company’s articles of association (e.g. contrary to the memorandum of association) and/or the law (e.g. a decision is adopted which violates the provisions of a law), the minority shareholder/partner may challenge the validity of the decision before the courts.

In some situations the right to appeal must be exercised within a certain time limit (e.g. 15 days), while in other situations the right to appeal can be exercised at any time, without time limit (e.g. within 1 year from the time of the decision).

For more details on the grounds for cancelling an AGM resolution please visit the section Cancellation of AGM resolutions.

Right to receive dividends from company profits

If the company makes a profit, it can be distributed in the form of dividends to shareholders.

What needs to be stressed is that the mere generation of profit does not automatically entitle the partners/shareholders to receive dividends.

The distribution of profits in the form of dividends or their transfer to the company’s reserves or their allocation for investment purposes is a matter for the general meeting of members/shareholders.

Only if the general meeting of members/shareholders decides to distribute the profit in the form of dividends are the members/shareholders entitled to receive the dividends.

How we can help you

Our team of lawyers can advise you and provide you with legal assistance and/or representation in order to effectively exercise any of your rights as a partner/shareholder of a company:

• taking the necessary steps to find out certain information;
• assistance or representation at general meetings of members/shareholders;
• legal assistance or representation for the appointment of directors by cumulative voting;
• legal assistance and representation in order to challenge a decision of the general meeting of members/shareholders before the courts.

Additional information on minority shareholder rights